Governance as the New Public Management

Initially the ‘new public management’ (NPM) had two meanings: managerialism and the new institutional economics (see Hood 1991; Pollitt 1993).[1] Managerialism refers to introducing private sector management methods to the public sector. It stresses: hands-on professional management, explicit standards and measures of performance; managing by results; value for money; and, more recently, closeness to the customer. The new institutional economics refers to introducing incentive structures (such as market competition) into public service provision. It stresses disaggregating bureaucracies; greater competition through contracting out and quasi-markets; and consumer choice. Before 1988, managerialism was the dominant strand in Britain. After 1988, the ideas of the new institutional economics became more prominent.

NPM is relevant to this discussion of governance because steering is central to the analysis of public management and steering is a synonym for governance. For example, Osborne and Gaebler (1992: 20) distinguish between ‘policy decisions (steering) and service delivery (rowing)’, arguing bureaucracy is a bankrupt tool for rowing. In its place they propose entrepreneurial government based on ten principles:

Most entrepreneurial governments promote competition between service providers. They empower citizens by pushing control out of the bureaucracy, into the community. They measure the performance of their agencies, focusing not on inputs but on outcomes. They are driven by their goals—their missions—not by their rules and regulations. They redefine their clients as customers and offer the choices... They prevent problems before they emerge, rather than simply offering services afterwards. They put their energies into earning money, not simply spending it. They decentralize authority, embracing participatory management. They prefer market mechanisms to bureaucratic mechanisms. And they focus not simply on providing public services, but on catalysing all sectors—public, private, and voluntary—into action to solve their community’s problems.

Clearly NPM and entrepreneurial government share a concern with competition, markets, customers, and outcomes. This transformation of the public sector involves ‘less government’ (or less rowing) but ‘more governance’ (or more steering) (Osborne and Gaebler 1992: 34).[2]

  • [1] Inevitably meanings proliferate and the term has been extended to cover the corporatetakeover of public services and post-bureaucratic public management. See: Dunleavy 1994;Yeatman 1994; and Barzelay with Armajani 1992.
  • [2] I do not use ‘steering’ as a synonym for policy decisions in this chapter but use it to refer to amode of control which involves setting a norm and correcting deviations from it (see Dunsire1990). Also, it is useful to distinguish steering (the process) from directedness (the effect).Andrew Dunsire, personal correspondence, 28 April 1994.
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